Supreme Court takes up business cases

By NFIB,

NFIB is monitoring two small business cases in the 2019 Supreme Court session.

The first case concerns the reach of the federal government in regulating water permits, while the second concerns the standards for fair and appropriate resolution of discrimination lawsuits.

Below is a breakdown of the cases and how the rulings may affect small business.

County of Maui, Hawaii, v. Hawaii Wildlife Fund, et al.

NFIB has been a leader in the fight to rein in federal overreach under the Clean Water Act in our lawsuit to invalidate expansive rules under the Obama Administration, and in urging the Trump Administration to provide small business landowners with more easily comprehensible rules for delineating regulated “waters.” In this lawsuit, environmental activists seek to stretch the reach of the Clean Water Act in a new way—one that should concern anyone with even modest development plans. Whether constructing a new warehouse or other facilities for your business, you may run into problems if the activists win in this case.

At issue in County of Maui is a public wastewater treatment facility. Activists argue that a federal permit is required under the federal Clean Water Act because pollutants might travel underground—through land that is clearly not subject to CWA jurisdiction—and might eventually make its way to the Pacific Ocean. If accepted in the decision, this interpretation would require landowners to acquire federal permits for something as simple as constructing a septic tank—meaning incredible delays and exorbitant costs for what should be very simple projects.

The Ninth Circuit ruled in favor of Hawaii Wildlife Fund. But the NFIB Small Business Legal Center is calling for a reversal in its amicus brief. The brief argues that Clean Water Act regulation should apply only when it concerns interstate commerce, and that CWA permits are only required for projects that will result in the direct discharge of pollutants into jurisdictional waters—as opposed to construction in dry upland areas.

“We are always trying to limit the scope of the Clean Water Act to what it was intended,” says NFIB’s Small Business Legal Center Executive Director Karen Harned. “Under the Constitution, the state governments are supposed to be the primary governments that regulate land. We’re trying to get the Supreme Court to give more clarity on where the federal government cannot regulate.”

Comcast Corp. v. The National Association of African American-Owned Media, and Entertainment Studios Networks, Inc.

Small business owners fear nothing more than the allegation that they’ve acted with discriminatory intent when making business decisions. It’s a frustrating issue because it is so easy for someone to allege discrimination and so costly to prove that you did everything right in court. But the Supreme Court is now set to decide an important case that may either tilt the scales further against small business defendants, or may provide some degree of relief. That is to say, the stakes are high.

As issue in Comcast Corp. is the question of how courts should approach these discrimination claims. In its amicus brief, NFIB Small Business Legal Center argues that a plaintiff should have to show that racial discrimination was the actual cause of harm, rather than one of several possible reasons for a decision. In other words, so long as a business can show legitimate business reasons for its decision, the case should be dismissed—unless the plaintiff can definitively prove that discrimination was the motivating factor.

Here as well, NFIB is urging reversal of a highly concerning Ninth Circuit decision. The Court of Appeal ruled that a discrimination case should be allowed to move forward to a jury trial on the view that race might have been one of several motivating factors in a Comcast business decision. Specifically, Entertainment Studios Network, whose founder and owner is African American, sued Comcast for racial discrimination after Comcast declined to carry ESN channels. In its suit, ESN argued that Comcast’s decision violates federal law 42 U.S.C. Sec. 1981, which bars racial discrimination in contracts.

Comcast argues that to succeed in its discrimination claim, ESN should have to show that the cable operator would have awarded a contract to ESN channels, but for the fact that ESN’s owner was in a protected class. NFIB’s arguments support this position, recognizing that discrimination is patently unlawful, while insisting that Section 1981 should not be turned into a tool for plaintiffs who have not actually been harmed by discrimination (and who would have been treated the same way regardless of their race).

“This is a lawsuit abuse case,” Harned says. “We want to ensure that true racial discrimination is dealt with appropriately. But we need clear rules and a clear line.”

While the NFIB Legal Center will closely monitor these two cases, the court may take up more cases of interest to small business owners and NFIB members at the end of September.